11 July 2024
TDS (Tax Deducted at Source) is generally applicable when payments are made to a resident for specified services or goods. Whether TDS is applicable on the renewal of ZOHO license depends on the nature of the payment and the terms under which the payment is made. Here are some points to consider:
1. **Nature of Payment:** - **Service Payment:** If the payment for the ZOHO license renewal is considered a payment for services rendered, TDS may be applicable under section 194J of the Income Tax Act. Section 194J covers payments made for professional or technical services, which could potentially include software licenses depending on how they are classified. - **Goods Payment:** If the payment is considered for the purchase of goods (software), TDS is generally not applicable as per the current tax laws.
2. **Threshold Limits:** - TDS under section 194J is applicable if the aggregate amount paid or credited during the financial year exceeds Rs. 50,00,000. Below this threshold, TDS may not be required to be deducted.
3. **Rate of TDS:** - If TDS is applicable under section 194J, the current rate of TDS is 10%. However, if the payee does not furnish their PAN, TDS is deducted at 20%.
4. **Exemption/No TDS Certificate:** - If the payee has obtained a No TDS Certificate or exemption certificate from the Income Tax Department, then TDS may not be applicable.
5. **Tax Consultation:** - It is advisable to consult with a tax professional or chartered accountant to determine the exact applicability of TDS in your specific case. They can review the nature of the payment, the terms of the license agreement, and advise on compliance with TDS provisions.
In summary, if the payment for ZOHO license renewal is considered a payment for services and exceeds the threshold limits specified under section 194J, TDS may be applicable. It's important to assess the specific circumstances and seek professional advice to ensure compliance with tax laws.
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